TMI Tax Updates - e-Newsletter
September 19, 2017

Case Laws in this Newsletter:

Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. MISTAKES IN DRAFTING

   By: DR.MARIAPPAN GOVINDARAJAN

2. All about E-way Bill under GST

   By: Anuj Bansal

News

1. Manmohan takes potshots at note ban, 'hasty' rollout of GST

2. GST on petrol, diesel requires wider discussion: Nitish

3. RBI Reference Rate for US $

Notifications

GST - States

1. 23/2017 - dated 11-9-2017 - Assam SGST

Seeks to amend Notification No. FTX.56/2017/30 (No.17/2017) DT.29-06-2017 to make Electronic Commerce Operator (ECO) responsible for payment of GST on services provided by way of house-keeping such as plumbing, carpentering etc.

2. 22/2017 - dated 11-9-2017 - Assam SGST

Seeks to amend Notification No.FTX.56/2017/26Dated 29th June, 2017 (No.13/2017) to amend RCM provisions for GTA and to insert explanation for LLP.

3. 21/2017 - dated 11-9-2017 - Assam SGST

Seeks to amend Notification No.FTX.56/2017/25Dated 29th June, 2017 (No. 12/2017) to exempt services provided by Fair Price Shops to Government and those provided by and to FIFA for FIFA U-17. Also to substitute RWCIS & PMFBY for MNAIS & NAIS, and insert explanation for LLP.

4. 20/2017 - dated 11-9-2017 - Assam SGST

Amendments in the notification No. FTX.56/2017/24 dated 29th June, 2017 (Notification No. 11/2017-State Tax Rate) - relating to Composite supply of works contract.

5. FTX.56/2017/Pt-I/053 - dated 7-9-2017 - Assam SGST

Constitution of Screening Committee on Anti-profiteering for the State of Assam.

6. S.O. 145. - dated 7-9-2017 - Bihar SGST

Notification form Waiving penalty the all registered persons who failed to furnish the return in FORM GSTR-3B.

7. 28/017-State Tax - dated 6-9-2017 - Chhattisgarh SGST

Waiver the late fee payable persons who failed to furnish the return in FORM GSTR-3B.

8. 27/2017-State Tax - dated 30-8-2017 - Chhattisgarh SGST

The Chhattisgarh Goods and Services Tax (Fifth Amendment) Rules, 2017.

9. 22/2017-State Tax (Rate) - dated 22-8-2017 - Chhattisgarh SGST

Amendments in the notification No. 13/2017-State Tax (Rate) - F-10-43/2017/CT/V (81),

10. 38/1/2017-Fin(R&C)(13)/2357 - dated 13-9-2017 - Goa SGST

The Goa Goods and Services Tax (Sixth Amendment) Rules, 2017.

11. 38/1/2017-Fin(R&C)(19/2017-Rate)/2933 - dated 22-8-2017 - Goa SGST

Amendments in the Notification No. 38/1//2017-Fin(R&C)(1/2017-Rate) dated the 30th June, 2017 - relating to tractors Parts.

Circulars / Instructions / Orders

GST - States

1. CIRCULAR NO. 06/2017-GST - dated 5-9-2017

Deduction of Tax at Source (TDS) in respect of works contractors and suppliers regarding.

2. CIRCULAR NO. 07/2017-GST - dated 5-9-2017

Liability, submission of return, registration, eligibility to make interstate sale/purchase and transfer of goods against Form-C and Form-F, etc.

3. CIRCULAR NO. 05/2017-GST - dated 4-9-2017

System based reconciliation of information furnished in FORM GSTR-1 and FORM GSTR-2 with FORM GSTR-3B.

Customs

4. 118/2017 - dated 11-9-2017

Sub:- Procedure to be followed for Import under DEEC/EPCG Scheme- reg.

5. 36 /2017 - dated 6-9-2017

Subject: Implementing Electronic Sealing for Containers by exporters under self- sealing procedure prescribed vide Circular No.26/2017-Customs, dated 01.07.2017 regarding.

6. 14 / 2017 - dated 4-8-2017

Subject : Compliance of International Standards for Phytosanitary Measures (ISPM-15) in respect of wood packing material by exporters - Regarding.

7. 97/2017 - dated 28-7-2017

Sub: Detailed guidelines for re-testing of samples - reg.

Central Excise

8. F. No. 275/11/2017-CX.8A - dated 18-9-2017

Filing of Special Leave Petition against Orders of Hon'ble High Courts staying Collection of Tax under GST- reg.

9. D.O.F.No.275/65/2013-CX.8A - dated 5-9-2017

Defence against Writ Petitions/PILs relating to GST- reg.

Highlights / Catch Notes

Income Tax

• Section 54F Exemption: No Completion Certificate Needed for Deduction on Long-Term Capital Gains Investment.

  Case-Laws - AT : Exemption u/s 54F - LTCCG - once entire net consideration is invested, the absence of completion certificate cannot be a ground to deny the benefit of deduction.
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• Deduction u/s 10B: Authorization Alone Doesn't Mark Start of Manufacturing for Tax Benefits.

  Case-Laws - AT : Deduction u/s 10B - initial AY - Mere authorization to enable the Assessee to import material or export produce in the earlier date would not ipso facto tantamount to commencement of substantial activity of ‘manufacture’/’production’.
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• Sick leave liabilities based on notional figures not deductible under income tax; Section 43B(f) inapplicable.

  Case-Laws - AT : Provision for sick leave liability - based on the basis of notional figures - such notional liability cannot be allowed as deduction - section 43B(f) is not applicable.
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• Explanation 5A of Section 271(1)(c) Income Tax Act can't be applied retroactively; penalties before June 1, 2007, are exempt.

  Case-Laws - AT : Penalty u/s 271(1)(c) - the amended provision of Explanation 5A made applicable w.r.e.f from 1.6.2007 cannot be pressed into service.
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Customs

• Classify Well-being and Hygiene Products Under Chapter 21 or 33 Based on Nature and Usage.

  Case-Laws - AT : Classification - Most of the products are aimed at enhanced well-being or hygiene and improved body conditions. These type of generic group items are rightly to be considered under Chapter 21 or 33 depending on the nature and usage.
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• Appellant Retains Benefit as Main Condition Unbroken; Late Extension Request Doesn't Deny Re-import Privilege.

  Case-Laws - AT : When the main condition of notification has not been violated by the appellant, therefore the benefit of notification cannot be denied merely on the ground that appellant did not seek extension of time within 6 months of re-import
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• Residual Aviation Fuel Valuation Excludes Freight; Rule 10(2) Inapplicable Per Customs Case Law.

  Case-Laws - AT : Valuation - leftover ATF available in the fuel tank of aircraft - there is no freight element involved and hence, there is no application for Rule 10 (2).
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Service Tax

• Service Tax: Indian Rupees Received via Silicon Valley Bank Count as Convertible Foreign Exchange for Service Tax Purposes.

  Case-Laws - AT : Export of services - Since the Indian rupee is received from the recipient of services through their foreign bank, Silicon Valley Bank of USA, the receipt of Indian rupee shall be treated as convertible foreign exchange.
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• Charges for Agency Supervision Not Automatically Under BAS; Revenue Must Prove BAS Classification.

  Case-Laws - AT : BAS - Just because charges are paid to a agency for supervision, demand under Business Auxiliary Service cannot be made. It is incumbent upon Revenue to show that said services are classifiable under Business Auxiliary Service
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• Greenhouse Installation Requires Service Tax Payment, Appellants Informed by Court Decision.

  Case-Laws - AT : Construction of Green House - appellants are engaged in the activity of installation of plant (greenhouse), and therefore the appellants are liable to pay services on the said activity.
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Central Excise

• Appellants Seek to Classify Custom Products as "Lifting Machinery" Without Evidence of Single Machine Status.

  Case-Laws - AT : The products are custom made as per the needs of each of the buyer. The appellants are manufacturing a few item and they wish to call those items collectively as 'Lifting machinery'. They have, however, not come forward with any evidence that the said items manufactured by them together constitute a machine.
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Case Laws:

• Income Tax

• 2017 (9) TMI 976
  Installation Permanent Establishment (PE) - ad-hoc attribution between sales and services - taxability of income as fees for technical services - Held that:- Court while not setting aside the impugned order of the ITAT in its entirety, sets aside only that portion of the impugned order of the ITAT that disposes of the Assessee’s appeals and restores the aforementioned appeals of the Assessee to the file of the ITAT for adjudication of the aforementioned grounds regarding installation Permanent Establishment (PE), ad-hoc attribution between sales and services and taxability of income as fees for technical services. It is made clear that the ITAT is only required to adjudicate the above grounds urged by the Assessee which were not adjudicated upon by it in the impugned order and no other ground. However, after the decision of the ITAT in terms of this order, it would be open to the Assessee, if so warranted, to file appeals before this Court challenging the said order of the ITAT as well as the impugned order of the ITAT challenged in the present appeals insofar as it decides the other grounds against the Assessee. The appeals of the Appellant-Assessee before the ITAT will now be listed before the ITAT on 24th October 2017 for directions.

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• 2017 (9) TMI 975
  Estimation of turnover - as per Tribunal First Appellate Authority while restricting the gross profit rate at the rate of 9% taken into consideration the overall facts and circumstances of the case - fair and reasonable opportunity availability - Held that:- No error of law apparent on the face of the record nor perversity in the order of the Tribunal. The reasoning of the Tribunal's order is not vitiated by the alleged non-consideration of the grievance of the appellant/assessee that fair and reasonable opportunity was denied to it. The Tribunal found from the record that more than adequate and sufficient opportunity was given to produce the records. The estimation had to be done once the assessee was not cooperating. In such circumstances, a substantial relief has already been derived by the appellant/assessee. We do not think that we should reappraise and re-appreciate the same factual materials. We cannot arrive at a different conclusion merely because that would be possible. On the other hand, what we find is that such reappreciation and reappraisal is impermissible in law. More so, when there is no perversity in the findings of the Tribunal. Its view is imminently possible. We do not find any merit in the appeal. It is dismissed.

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• 2017 (9) TMI 974
  Disallowance under Section 14A - rule 8D applicability - allocation of interest expenditure towards earning of exempt income - Held that:- Once the Tribunal has approached the matter on the basis that the First Appellate Authority could have applied the provision, namely, Section 14A as also Rule 8D with effect from the Assessment Year 2008-09, but yet restricted the disallowance to Rs. 2,10,756/on facts, then, we do not think that any of the questions proposed are substantial questions of law. All the more, when the tax effect was meagre. We do not think that any larger issue or wider question has been dealt with by the Tribunal nor its observations raise otherwise a substantial question of law. In the circumstances, if the matter is approached from the above angle, this appeal need not be entertained. It is dismissed.

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• 2017 (9) TMI 973
  Renewal of approval under Section 80G denied - cancelling the registration under Section 12A - proof of charitable activities - Held that:- Once the Tribunal has followed the orders on facts for the prior assessment years and on both counts agreed with the assessee that there is no violation of the Capitation Fee Act, nor the institutions are carrying on their activities on commercial lines, then, we do not think that the Commissioner was justified in cancelling the registration under Section 12A of the IT Act. His order has been rightly interfered with. Even in the case of renewal of approval under Section 80G of the IT Act, the Tribunal found that the same observations have been made. Rather, the Commissioner relied upon the cancellation of registration under Section 12A of the IT Act. The Tribunal concluded that once it has assigned cogent and satisfactory reasons for restoring registration under Section 12A, there was no justification for not renewing approval under Section 80G(5) Clause (vi) of the IT Act. These are all factual findings and based on materials on record. We do not think that the appreciation and appraisal of the factual materials by the Tribunal is perverse or vitiated by any error of law apparent on the face on record. - Decided in favour of assessee.

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• 2017 (9) TMI 972
  Cancelling the Registration granted to the assessee under Section 12A - proof of charitable activities - Director jurisdiction to cancel the registration - whether receipts of income of the assessee were not in the nature of business income and therefore, proviso to Section 2(15) is not attracted to its case? - Held that:- Once the Tribunal came to the conclusion that the Director had no jurisdiction to cancel the exemption for the assessment years prior to the amendment, which came in the Act from 1st June, 2010, that being the essential conclusion, the other two arguments noted by the Tribunal and dealt with may have been found in the same order which was not interfered with by this Court, but what we find is that the decision of the coordinate Bench which was followed in rendering the subject decision by the Tribunal and essentially on the point of jurisdiction, was enough to conclude the controversy. The arguments of the assessee's representative on the applicability of proviso to Section 2 Clause (15), therefore, were strictly not required. They were not necessary for the decision on the point involved. Once on jurisdiction, the petitioner was on a sound footing, then, we do not think that the observations of the Tribunal would have any bearing on the assessments that have been framed for the same and subsequent assessment year. In challenging that assessment orders if they are adverse to the petitioner's interest, and if such challenge is raised and is indeed pending, the Tribunal shall decide the issues or grounds in such Appeals pending before it on their own merits and in accordance with law.

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• 2017 (9) TMI 971
  Income from sale of land - business income or capital gain - nature of land - cost of the land determined proportionately - Held that:- We do not see how the Tribunal can be faulted. The Tribunal has recorded that the assessee was holding 50.16 acres of land, out of which 27.44 acres of land is the subject matter of the MOU dated 27the December, 2007. The remaining land aggregating to 22.72 acres has been converted by the assessee as capital asset, that is subsequent to the impugned transaction. It is in these circumstances and when the total cost of the land has been determined proportionately that all the questions, and particularly whether the impugned transaction relates to transfer of stock-in-trade or capital asset, have been answered in favour of the assessee and against the Revenue. To our mind, when the written documents were perused and with the corroborating materials, the Tribunal rightly concluded that the impugned transaction relates to the business of the assessee and is to be assessed as such under the head “profit and gains of business and profession”. The Tribunal being empowered by law to undertake that exercise, has performed it's duty. We do not see how in such background can the Tribunal's view be termed as perverse or it's order termed as vitiated by any error of law apparent on the face of record. No substantial questions of law. - Decided against revenue.

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• 2017 (9) TMI 970
  Cancelling registration and exemption granted u/s 12AA - refusing to register assessee's establishment as a trust - Held that:- The issue has been decided by a co-ordinate Bench of this Court [2016 (12) TMI 247 - PATNA HIGH COURT] held in view the decision in Dawoodi Bohra’s case [2014 (3) TMI 652 - SUPREME COURT] which squarely applies to the case of the petitioners, rather their case stands on a higher footing as they have established institutions which are created for the benefit of all sections of society and the religious activities carried out by them are minuscule in comparison to their main activity. Even the rule of 5% would apply only with regard to exemption under Section 80G and not with regard to the registration under Section 12AA or the cancellation thereof. This Court is, therefore, of the view that the order dated 28.11.2012 of the CIT-1, Patna cancelling the registration of Imarat Shariah Trust under Section 12AA is contrary to law.’ Once it has been held by a Co-ordinate Bench of this Court that the petitioner-trust is entitled to registration under Section 12AA of the Act and the cancellation on the grounds as mentioned therein and reproduced hereinabove are not correct, we find that the order passed impugned in this writ petition is liable to be quashed and the writ petition allowed in favour of assessee.

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• 2017 (9) TMI 969
  Validity of assessment u/s 144 - notice u/s 143(2) was not served at correct address - Held that:- In view of the frequent change in addresses, the assessee was required to inform the Assessing Officer to record the changes in his address. The Income Tax Department has provided the facility of change of address in Permanent account Number Database through form No. 49A and the assessee can request for change of jurisdiction of the Assessing Officer in view of the change address or place. In view of rival assertion on the issue of the known address of the assessee, it is important to know whether the assessee provided the address at which notice was served by the Assessing Officer i.e. “U- 51/384, DLF-III, Qutab Enclav, Gurgaon” in PAN data base or it is the mistake on the part of the Assessing Officer in mentioning the correct address. After verification of the above facts, the CIT-(A) is directed to adjudicate the issue of validity of service of notice. If he finds notice of service as valid, then he is directed to decide the issue on merit of the addition also. It is needless to mention that assessee as well as Assessing Officer shall be afforded adequate opportunity of being heard. The grounds of appeal are accordingly allowed for statistical purpose.

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• 2017 (9) TMI 968
  TPA - addition on account of arm’s length price - rejection of ‘CUP’ method and adopting ‘TNMM’ as the most appropriate method for computation of the arm’s length price - selection of appropriate method for computation of arm’s length price - Held that:- We find that when the pollution norms of the Europe and the India during relevant period are different, the quality of the product cannot be same and in such situation adopting the transaction of the AE with third-parties in Europe as ‘CUP’ for comparison of the transaction with the assessee, is not correct. Moreover, the currencies of both jurisdiction are different and, therefore, also prices charged to party at the Europe and to AE in the India cannot be compared. Assessee’s international transactions cannot be benchmarked applying the ‘CUP’ method. The TPO has adopted TNMM as most appropriate method for computing the arm’s length price on the ground that the assessee operated as independent entrepreneur, as it caters to requirement of automobiles manufacturers in India like General Motors, Mahindra and Mahindra, and Ashok Leyland and compared the profit margins with the other comparables in similar market conditions. In our opinion, the approach of the learned TPO/AO is justified and we accordingly set aside the order of the learned CIT-(A) on the issue in dispute and uphold the order of the learned TPO/AO on the issue in dispute. Loss due to fluctuation in foreign exchange - whether loss should be treated as nonoperative expenditure in the case of the assessee - Held that:- As following the decision of the Tribunal in the case of McKinsey Knowledge Centre Private Limited (2017 (5) TMI 830 - ITAT DELHI), we hold that foreign exchange fluctuation loss is part of a operating expenses. Accordingly, the finding of the Ld. CIT-(A) on the issue in dispute is set aside and that of the Assessing Officer is upheld. TPO/AO has considered foreign exchange fluctuation loss as part of operating expenses in the case of the assessee, however, same has also to be considered in the case of the comparables. From the order of the lower authorities, it is not clear whether the AO/TPO has considered this aspect in the case of the comparables. Accordingly, we feel it appropriate to restore the issue of computing average margin of the comparables with limited direction to consider the foreign exchange fluctuation loss as part of the operating expenses in case of comparables also. What is the correct calculation of the PLI of the comparables as well as the assessee? - Held that:- CIT-(A) has already rectified the clerical mistake as under: “5.5 It is important to note at this point to say that while calculating the margin of the comparables, the TPO has taken OP/sales as the PLI. While calculating the ALP margin of the assessee, the TPO has multiplied the mean margin of the ALP of the comparable with that of cost base of the assessee instead of sales, which seems to be a clerical mistake. In the above calculation, this mistake is rectified. Since the appellant falls within the range, the other issues relating to the comparable becomes academic in nature and therefore they are not separately adjudicated.” Since the assessee is neither in the appeal nor in cross objection before us and, therefore, the arguments of the learned counsel regarding adopting of incorrect PLI by the TPO are not considered.

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• 2017 (9) TMI 967
  Assessment u/s 153A - proof of undisclosed income discovered from seized/incriminating material - Held that:- In the instant case the learned CIT-(A) has given the finding that as on the date of search no assessment was pending in both the assessment years involved. The learned CIT-(A) has also given the finding that no incriminating material was found or seized in relation to the assessment years involved and the Assessing Officer has not relied on the incriminating or seized material for making additions in the both the assessment years involved. See PCIT Vs. Metta Gutgutia [2017 (5) TMI 1224 - DELHI HIGH COURT] and CIT versus Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT ] - Decided in favour of assessee.

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• 2017 (9) TMI 966
  Reopening of assessment - addition of on account of share application money and commission expenditure - information received from Director of Income Tax (Investigation), New Delhi - non independent application of mind by AO - Held that:- Information shows that assessee has received the amount of credit through banking channels by mentioning names of the parties and cheque nos. with amount. This information by itself cannot be said to be tangible material. The A.O. has not gone through the details of these information and has not even applied his mind and merely concluded that he has reason to believe that income chargeable to tax has escaped assessment. The reason to believe are therefore, not in fact reasons but only conclusion of the A.O. The expression “accommodation entry” is used to describe the information set-out without explaining the basis for arriving at such conclusion. The A.O. being a quasi-judicial authority is expected to arrive at a subjective satisfaction independently on an objective criteria. The A.O. however, merely repeated the report of Investigation Wing in the reasons and formed his belief that income chargeable to tax has escaped assessment without arriving at his satisfaction. The reason to believe contain no reason but the conclusion of A.O. without any basis. Thus, there is no independent application of mind by the A.O. to the report of Investigation Wing which form the basis for reasons to believe that income has escaped assessment. The conclusion of the A.O. in the reason are at best reproduction of conclusion of the Investigation report. It is borrowed satisfaction not permissible in law. Appeal of the assessee is allowed.

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• 2017 (9) TMI 965
  Exemption u/s 11 - disallowing /adding rent (s) paid to trustees - excessive payments to specified persons u/s 13(3) - Held that:- The CIT(A) has taken into account an approved valuer’s report as well as all corresponding documents indicating all relevant particulars indicating the assessee to be utilizing vacant space alongwith land and building whilst concluding that the payments in question cannot be held as excessive ones. It has further come on record that the assessee had been paying similar rents in preceding assessment years as well. It places on record assessment order(s) pertaining to earlier assessment years not showing any such disallowance. The Revenue fails to rebut all these findings with the help of any cogent evidence on record. - No disallowance. Corpus fund addition in assessee's income - Held that:- Such a corpus is not assessable as taxable income as per case law DIT(E) vs. N. H. Kapadia Education Trust (2012 (5) TMI 236 - ITAT AHMEDABAD) and ITO vs. Sardar Vallabhbhai Education Society (2012 (10) TMI 283 - ITAT AHMEDABAD ). The Revenue is unable to point out any distinction on facts or law therein. We therefore decline the instant substantive ground as well. Treating development fund as assessee’s taxable income - Held that:- It is no more in dispute that this assessee is a registered trust(supra). Learned counsel for the assessee takes us to pages 16 to 18 of the paper book indicating it to have utilized the impugned development fund in relevant previous year. A co- ordinate bench in ITO vs. J. D. Tytler School Society (2014 (1) TMI 974 - ITAT DELHI) holds that such a development fund forming part of student fee as utilized in their amenities and welfare is in the nature of capital receipt not assesseable as income. We therefore find no reason to upset CIT(A)’s above extracted conclusion. This fifth substantive ground is accordingly rejected. Expenditure on donation to Delhi Public School as part of expenditure - Held that:- There is again no discussion in assessment order. We however find that hon’ble jurisdictional high court’s decision in Sarla Devi Sarabhai Trust’s case (1988 (3) TMI 53 - GUJARAT High Court) already decides the very issue in assessee’s favour. We therefore affirm the CIT(A)’s conclusion under challenge. The Revenue fails in its sixth substantive ground as well. Considering assessee’s investment in fixed assets as application of income as well as its deduction - Held that:- Satya Vijay Patel Hindu Dharmashala Trust v. CIT [1971 (12) TMI 8 - GUJARAT High Court ] wherein it has been "Held that the amount spent by the trustee in the construction of the new dharamshala was an application of income towards the charitable purposes of the trust" - Decided against revenue Disallowing depreciation to assessee trust - double deduction - Held that:- We find that this issue is no more res integra as hon’ble jurisdictional high court’s decision in CIT vs. Seth Manilal Ranchhodlal Bhavan Trust [1992 (2) TMI 51 - GUJARAT High Court] Revenue appeal dismissed.

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• 2017 (9) TMI 964
  Revision u/s 263 - Omission at the end of the AO not to treat this unutilized CENVAT credit as a part of closing stock rendered his order erroneous which is prejudicial to the interest of the Revenue - Held that:- According to the assessee, it has not claimed as deduction as a part of purchases. It is separately debited to CENVAT credit receivable account. If that was the situation, which has been verified in the Asstt.Year 2010-11 by the ld.CIT(A) vide order dated 1.12.2014 what was the occasion for the ld.Commissioner to relegate this issue to the AO without verifying the details on merit. The AO has passed the assessment order in pursuance of 263 order which was challenged in appeal before the CIT(A) and the ld.CIT(A) has followed order of the predecessor in the Asstt.Year 2010-11 dated 1.12.2014. Had the ld.Commissioner applied his mind and looked into the issue on merit, atleast this unnecessary exercise should have been avoided. As far as second issue is concerned, a conclusive finding have been recorded by the ld.CIT(A) in the Asstt.Year 2010-11 before the order passed under section 263 that payment of alleged gratuity was towards a approved fund. This order was not challenged. Appellant has made payment to an approved gratuity fund and therefore payment made is allowable as deduction u/s.36(1)(v) of the Act Thus we are of the view that no case is made out for taking action under section 263 of the Income Tax Act, 1961 - Decided in favour of assessee.

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• 2017 (9) TMI 963
  Penalty under section 271(1)(c) - validity of notice u/s 274 - bonafide explanation - false claim made by assessee - Held that:- Manjunath Cotton and Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT ) and held that in absence of specifying the limb of the 271(1)(c) of the Act under which penalty is to be levied, the notice under section 274 read with section 271(1)(c) of the Act was bad in law. We find that the assessee has not filed before us the copy of notice under section 274 read with section 271(1)(c) of the Act issued in the case of the assessee. In absence of a copy of such a notice, the decisions relied upon by the Ld. counsel cannot be applied in the case of the assessee. We also note that the issue of specifying charges in the notice under section 274 read with section 271(i)(c) of the Act was not raised specifically before the Ld. CIT- (A) and hence he has not adjudicated on this issue. Further, we find that in the assessment order as well as in penalty order, the Assessing Officer has clearly specified the charges for initiating penalty u/s 271(1)(c) of the Act. We also note that the Ld. CIT-(A) following the decision of the Hon’ble Delhi High Court in the case of Madhushree Gupta Vs. CIT (2009 (7) TMI 38 - DELHI HIGH COURT) has already rejected the argument of not mentioning in the impugned penalty order as to whether the penalty was levied on account of concealment or on account of furnishing of inaccurate particulars. We agree with the finding of the Ld. CIT-(A) that the assessee being a part of a large industry group having the assistance of lawyers, professionals and chartered accountants, cannot be allowed to shift the burden on the accountant, who being an employee of the assessee was not having any choice except filing affidavit. The Ld. CIT- (A) has also pointed out that it is not the case of the assessee that income from house property was declared for first-time in the year under consideration. The Ld. counsel has failed to rebut any of the above finding of the Ld. CIT-(A). The claim of depreciation and repair & maintenance expenses made in return of income is a clear case of false claim by the assessee and no bonafide explanation has been given by the assessee. - Decided against assessee.

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• 2017 (9) TMI 962
  Disallowance of deduction u/s 80IA - basis of sale price considered by the TPP for sale of power to the cement units of the appellant company - whether electricity duty and cess has to be excluded from the price while determining profits derived from the business? - Held that:- Identical issue has already been decided in assesee’s own case for A.Y.2008-09 and 2009-10 as held that as during the previous year relevant to the Asst Year 2009-10, the assessee in fact sold electricity at rates higher than that charged from it by the State Electricity Board. The assessee nevertheless made the computation for the purpose of section 80IA of the Act with reference to the price charged from it by the State Electricity Board. In such circumstances, we hold that, when it was permissible for the assessee to sell electricity to consumers and distribution licensees at rates higher than that paid by it to the State Electricity Board, the price charged by the State Electricity Board would be a very good indication of the market value of electricity and the assessee did not commit any error in adopting such price for working out the amount eligible for deduction u/s 80IA of the Act. The Tribunal agreed with the submission of the Assessee that the price paid by an assessee for purchase of raw material represents the market price of such raw material produced by the assessee. The Tribunal also held that the method adopted by the assessee viz. to take the average rate charged by the State Electricity Board for the previous month is quite appropriate and reasonable for determining the market value for the month of supply. The tribunal held that the annual weighted average adopted by the ld CITA would result in variations occurring during the year at different times being made applicable uniformly for the whole year and therefore the assessee’s method is more appropriate as it factors in variations as and when they take place. On the issue whether electricity duty and cess has to be excluded from the price while determining profits derived from the business, the Tribunal held that they are also to be considered as part of the price. - Decided against revenue Income derived by Thermal Power Plant cannot be held as income derived from eligible business for the purpose of allowing deduction u/s 80IA of the Act - Decided against assessee. Compensation paid for infringement of mining right - revenue or capital - whether infringed mining right transferred in lieu of compensation had got benefit of enduring nature, hence capital in nature? - Held that:- Identical issue was considered by the Tribunal in assesee’s own case for A.Y.2008-09 and 2009-10 held that payments are progressively distributed as they work, as they proceed year by year, going on with their work and the payments are in the nature of incidental expenditure to conduct the mine and the business operations. Therefore, held that the payment of compensation to persons whose rights are infringed by the mining activity is revenue in nature. Subsidy received - nature of receipt - Held that:- The subsidy in question is a capital receipt and not chargeable to tax. We also hold that capital receipt need not be reduced from the cost of the assets and under Explanation 10 to section 43(1) of the Act. We accordingly allow ground raised by the assessee in its appeal. Disallowance u/s 14A r.w.r. 8D - whether only investments from which exempt income was received should be considered - Held that:- Direct the AO to consider all investments (excluding investments in subsidiary companies) which yielded dividend income to the assessee for computing disallowance u/s 14A of the Act r.w. Rule 8D(2)(iii) of the Rules. Depreciation u/s 32(1)(ii) - allow balance 50% initial depreciation on Plant & Machinery put to use for a period of less than 180 days during the financial yer 2008-09 relevant to Asst. Year 2009-10 - Held that:- Assessee is entitled to additional depreciation (remaining portion). Ground raised by the assessee is allowed. Provision for leave encashment - whether it is neither a statutory liability nor contingent liability and therefore not to be considered for the purpose of computing disallowance u/s.43B(f)? - Held that:- We set aside the order of CIT(A) and remand the issue to the AO to pass order based on the outcome in the proceedings pending before the Hon’ble Supreme Court in the case of Exide Indusries Ltd. (2008 (9) TMI 921 - SUPREME COURT ). Thus ground raised by the assessee is allowed for statistical purposes. Provision for sick leave liability - whether is notional and contingent liability and therefore covered by the provisions of section 43B(f) ? - Held that:- This liability is purely notional and cannot be allowed as deduction. It is an admitted position that there is no out flow on this account in any assessment year and the liability is notional and is based purely on entries in the books of account on the basis of notional figures. This may be relevant for the purpose of showing the true and fair view of the state of affairs of the assessee as is required for reporting to share holders and other public authorities. When it comes to computing total income under the Act, such notional liability cannot be allowed as deduction. We concur with the view of CIT(A) in this regard. We are of the view that application of the provision of section 43B(f) of the Act would not be relevant because the liability in question is not otherwise allowable under the Act and Sec.43B of the Act will come into operation only when a expenditure is otherwise allowable under the Act. With this observation we dismiss ground raised by the assessee. Interest subsidy in question is a capital receipt not chargeable to tax.

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• 2017 (9) TMI 961
  Benefit of deduction u/s 54F - construction of a residential house completion by the assessee - absence of completion certificate - whether the absence of deposit of unutilised net consideration in a specific bank account as is required u/s 54F(4)should the Assessee be denied the benefit of deduction u/s 54F of the Act? - Held that:- The construction of a residential house was completed by the assessee within the period of three years from the date of transfer as is required u/s 54F(1) of the Act. The absence of completion certificate cannot be a ground to deny the benefit of deduction u/s 54F of the Act. CIT vs Sardarmal Kothari (2008 (6) TMI 15 - MADRAS HIGH COURT) in the context of deduction u/s 54F of the Act came to the conclusion that it would be enough if the assessee establishes that he has invested the entire net consideration within the stipulated period. Hon’ble Karnataka High Court in the case of CIT, Bangalore vs K.Ramachandra Rao [2015 (4) TMI 620 - KARNATAKA HIGH COURT] held that if the assessee invests the entire consideration in construction of the residential house within three years from the date of transfer he cannot be denied deduction u/s 54F of the Act on the ground that he did not deposit the said amount in capital gain account scheme before the due date prescribed u/s 139(1) of the Act. As the assessee invested the sale consideration in construction of a residential house within three years from the date of transfer, we are of the view that the assessee should be given the benefit of deduction u/s 54F of the Act on the sum of Rs. 16,50,000/- also and cannot be denied the benefit the said benefit for the reason that he had not complied with the requirements of Sec.54F(4) of the Act. Thus in effect the assessee would be entitled to deduction u/s.54F of the Act of Rs. 20,31,839/- viz., for the investment of Rs. 3,50,000/- in purchase of the land, Rs. 31,839/- stamp duty and registration charges and Rs. 16,50,000/- utilised for construction of a residential house within this period specified in section 54F(1) of the Act. The AO is accordingly directed to allow deduction u/s 54F of the Act a sum of Rs. 20,31,839/-. Appeal of the assessee partly allowed.

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• 2017 (9) TMI 960
  Revision u/s 263 - allowable expenditure in connection with the business of the assessee - Held that:- It is not disputed that the entire sum of Rs. 70,52,892/- had been duly paid by the assessee to M/s. Sayan Shipping and Cleaning Agency Pvt. Ltd.. In the reply to the show cause notice by CIT u/s 263 of the Act all the above facts are brought to the notice of CIT and CIT had not disputed the facts as stated by the assessee in such reply. The CIT however cross checked the ledger account statement submitted by M/s. Sayan Shipping and Cleaning Agency Pvt. Ltd. received in response to the notice issued by the AO u/s 133(6) of the Act while concluding the original assessment proceedings with the bill nos as produced by the assessee and found discrepancies in its bills. The order of CIT does not spell out as to what was the discrepancy. It is also not disputed that the CIT had not confronted the assessee with the nature of discrepancy. In the present case as rightly contended by the assessee in the light of the admitted factual position the entire sum of Rs. 70,52,892/- had been duly paid by the assessee to M/s. Sayan Shipping and Cleaning Agency Pvt. Ltd.. There cannot be any loss to the revenue in as much as the entire sum had been paid and was admittedly an allowable expenditure in connection with the business of the assessee. It cannot also be said that order of the AO was erroneous as the nature of error in the order of the AO has not been brought out in the order of the CIT. The CIT in the impugned order has not spelt out as what are the discrepancies between the ledger account statement of M/s. Sayan Shipping and Cleaning Agency Pvt. Ltd. and the bill numbers as furnished by the assessee. Without bringing material on record to show that the order of the AO was erroneous the CIT cannot invoke jurisdiction u/s.263 of the Act. - Decided in favour of assessee.

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• 2017 (9) TMI 959
  Revision u/s 263 - amount received by it on compulsory acquisition of land non liablility to tax under the head ‘Capital gain’ - nature of land sold - According to the CIT in the case of the assessee the agricultural land lost its character as agricultural land after acquisition by the railways because they used the land acquired for non agricultural purpose therefore of the view that the AO ought not to have allowed exemption u/s 10(1) - Held that:- There is a distinction between requisitioning of properties and compensation payable for acquisition of a property under the Land Acquisition Act. The payment for use of an occupation of a property cannot be equated with the payments made for acquisition of the property. In the former case only right to use and enjoy is transferred whereas in the later case there is a complete transfer of the whole interest over or complete ownership over the property. We are therefore of the view that the approach adopted by CIT in the present case was not proper in law. Since the order of the AO is not erroneous the CIT was not justified in invoking the jurisdiction u/s 263 of the Act. We therefore quash the order u/s 263 of the Act and allow the appeal of the assessee.

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• 2017 (9) TMI 958
  Revision u/s 263 - AO allowing deduction to the assessee u/s 35(2AB) was erroneous and prejudicial to the interest of the revenue - time limit within which application for approval in form No.3CM has to be made - Held that:- It is undisputed that Department of Scientific and Industrial Research (DSIR) granted recognition to the Assessee for the period from April 1st, 2010 to 31st March, 2019. Deduction Sec.35(2AB) read with rule 6 does not prescribe any time limit within which application for approval in form No.3CM has to be made. Once approval is granted by DSIR the same would apply till it is revoked. In the case of Claris Lifesciences Ltd. [2008 (8) TMI 579 - Gujarat High Court] and Sadan Vikas (India) Ltd. [2011 (2) TMI 66 - DELHI HIGH COURT] have taken the view that on a plain and harmonious reading of rule 6(5A) and Form No. 3CM it would be appropriate to come to a conclusion once a research facility is approved, the entire expenditure so incurred on development of R&D facility has to be allowed for weighted deduction as provided by s. 35(2AB). In the light of above it cannot be said that the order of the AO was erroneous. Even if it were to be said that the view taken by the Courts and Tribunal are not correct, the said views were a possible view. Once the view taken by the AO is either correct or a possible view then the CIT in exercise of his powers u/s.263 of the Act cannot hold the order of the AO to be erroneous just because he does not agree with the view of the AO. Appeal of the Assessee is allowed.

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• 2017 (9) TMI 957
  Disallowance of deduction claimed u/s 10B - commencement of manufacture or production or articles or things - year of assessment - CIT(A) has decided the issue in favour of assessee and held that year of manufacture/production as a 100% EO for the purpose of eligibility of claim of under s.10B is FY 2001-02 relevant to AY 2002- 03 - Held that:- CIT(A) has examined the issue in perspective and has come to rightful conclusion on facts. The revenue could not bring any positive evidence other than the certificate from the Accountant to show that actual commencement of manufacture/production took place in FY 2000-01 relevant to AY 2001-02 indeed. On the other hand, the assessee has brought on record overwhelming evidences of factual nature to support its case that the manufacture or production articles or things as contemplated under s.10B of the Act could not have been carried out in FY 2000-01 relevant to AY 20001-02. The commencement of manufacture/production in 2002-03 is supportable by plethora of evidence in the form of return of income, financial statements, electricity bill, change of location plot for manufacture, certificate from sale tax authorities availability of plant and machinery etc. These evidences in totality leaves us in no doubt that year of commencement noted by the Accountant in its certificate was inadvertent mistake inconsistent with the underlying facts, for which relief claimed under s.10B of the Act cannot be denied. Mere authorization to enable the Assessee to import material or export produce in the earlier date would not ipso facto tantamount to commencement of substantial activity of ‘manufacture’/’production’. The Assessee has successfully discharged onus which lay upon it. Under the circumstances, we find no fault with the conclusion derived by the CIT(A) and refuse to interfere therewith. - Decided against revenue

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• 2017 (9) TMI 956
  Unexplained jewellery - source of the impugned addition for jewellery - Held that:- Assessee’s plea that the jewellery did not belong to the assessee but belong to the married daughter is not sustainable in light of the fact that in search the assessee’s wife Smt. Smita Thakkar in her statement dated 28.09.2011 in response to Q.4 wherein she was asked to explain the source of jewellery found in Locker No. 321, she has confirmed the jewellery found in locker no. 321 consists of Gold & Diamond jewellery are valued at Rs. 39,54,600 on 28.09.2011. The assessee’s wife further explained that jewellery belongs to herself and her daughter-in-law and also of her family members consisting of herself and her husband the assessee. It was also explained by her that the jewellery pertains to all the family members. Further, in response to the Assessing Officer’s enquiry on the source of the jewellery, assessee’s Counsel has given explanation and reconciliation. In those submissions it was never stated that assessee cannot give any explanation as the jewellery did not belong to him or that the onus was not upon the assessee to explain the same. When the assessee’s explanation has not been accepted, for being devoid of cogency, assessee is raising ground that the jewellery did not belong to the assessee, rather it belonged to his daughter. As find that the submission is not at all sustainable. CIT(A) in the case of assessee’s daughter has clearly held that the said addition on account of jewellery was not sustainable in her hands. In this background, we find that orders of authorities below are very cogent and correct. The shifting of stand by the assessee now de hors any cogent explanation for the source of impugned jewellery found, is not at all sustainable. - Decided against assessee.

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• 2017 (9) TMI 955
  Proceedings initiated under section 153C - illegal payments - whether any document belonging to the assessee has been found which can form the basis of initiation of proceedings u/s 153C? - Held that:- Since the instant proceedings were initiated under section 153C of the Act and no incriminating material has at all been found, as such, the additions made by the AO and sustained by the Ld. CIT (A) is wholly unsustainable in view of the judgments of jurisdictional High Court in the cases of CIT vs RRJ Securities Ltd [2015 (11) TMI 19 - DELHI HIGH COURT] and CIT vs Kabul Chawala [2015 (9) TMI 80 - DELHI HIGH COURT]. Hence, the aforesaid additions made by the AO and sustained by the Ld. CIT (A) are hereby deleted, being beyond the scope of section 153C of the Act. As already held that documents being relied upon by the revenue are unreliable being unauthenticated and hence dumb. The fact remains that the author of the documents has also not been produced for the cross examination and, therefore, on the basis of such documents, addition cannot be made. We also find strength in the contention of learned counsel of assessee that statements recorded behind the back of assessee, i.e. of Sh. R.K. Miglani and that of the directors of M/s Prudent Distillery cannot be relied upon and need to be excluded for consideration as none of them have been produced for cross – examination. The assessee’s specific request for cross examination was rejected by the AO of his order on the ground that Shri Miglani is employee of assessee. This finding of AO, as has been noted above is factually incorrect. Sh. R.K. Miglani was the General Secretary of M/s UPDA and not an employee of assessee and, therefore, it was incumbent upon the AO/ Ld. CIT (A) to have provided the opportunity to cross – examine the person on whose statement reliance was being placed by the Department. This is an elementary principle of law and not providing such opportunity is fatal to the proceedings and no additions, can be made on the basis of such statement as has been held by the Hon’ble Apex Court in its judgment in the case of M/s Andaman Timber Industries vs CCE (2015 (10) TMI 442 - SUPREME COURT ). Disallowance on account of “Tips” - Held that:- With respect to the said disallowance, we find that the ITAT had held that 1/3rd of the expenditure could alone have been held to be disallowable. It is held, here as well, following the order of ITAT, that the ld. CIT (A) was not right either in law or on facts to have sustained the entire disallowance. Not allowed the carry forward of long term capital loss and also challenged the short deduction under section 80M - Held that: On perusal of the assessment order, we find that no discussion has been made while making the said disallowance by the AO and further, the same has not been allowed in the computation of tax being worked out by the AO and thus, we hold here that, the same needs to be allowed in view of the inadvertent mistake having crept in the order of assessment.

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• 2017 (9) TMI 954
  Penalty u/s 271(1)(c) - Survey operations u/s.133A(1) conducted simultaneously in the premises of some of the members of the group and Assessment u/s.153A(1)(b) completed - 'undisclosed income' was declared by the appellant in the statement recorded during search and the same was also disclosed in the return filed pursuant to notice issued under section 153A, - Held that:- There cannot be any dispute to the fact that once a return is filed pursuant to notice under section 153A, the same is treated as return filed under section 139 of the Act [refer clause (a) of section 153A(l)]. Further, concealment/ furnishing of inaccurate particulars of income/undisclosed income, has to be necessarily seen vis-a-vis return filed by the appellant Once, income it is declared which is accepted as such under section 139 r.w.s. 153A of Act, then, the question of there being concealment/ furnishing of inaccurate particulars of income/undisclosed income, does not arise at all. In the present case, the entire undisclosed income has been offered for tax by the appellant-company in the return income, which was subject matter of assessment before assessing officer. The return filed by the appellant has been accepted as such by your assessing officer, without any variation. Therefore, in the absence of any undisclosed income being found in the assessment vis-a-vis the return filed, the issue of imposition of penalty does not, arise. Levy of penalty has to be as per law applicable on the date of filing of the return and admittedly on 03.03.2009 when the return of income for assessment year 2006- 07 was filed by the appellant, the unamended provisions of Explanation 5A to section 271(1)(c) of the Act were on the statute. The question whether there was concealment of income and/or furnishing inaccurate particulars thereof by the appellant in the return of income filed on the said date has to be seen vis-a-vis, law as applicable on that date. In that view of the matter, the amended provision of Explanation 5A made applicable w.r.e.f from 1.6.2007 cannot be pressed into service. In view of the aforesaid, the pre-substituted provisions of Explanation 5A to Section 271 would, therefore, apply in the present case of the appellant-company for the year under consideration, even though the said Explanation stands substituted retrospectively by the subsequent Finance Act.- Decided in favour of assessee.

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• Customs

• 2017 (9) TMI 953
  Levy of CVD on import of silk fabrics - the decision in the case of The Commissioner of Customs (Exports) Versus M/s. Prashray Overseas Private Limited, Customs Excise & Service Tax Appellate Tribunal [2016 (5) TMI 1106 - MADRAS HIGH COURT] contested, where it was held that In cases where the exemption Notification stipulates two conditions, namely that the inputs should have suffered duty and that no CENVAT credit should have been availed, then the benefit of the Notification will be available only if both conditions are satisfied - Held that: - leave granted.

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• 2017 (9) TMI 951
  Pre-deposit - Penalty u/s 112(b) - Held that: - in view of amended provisions of Section 129A of the Customs Act, the requirement of pre-deposit at the rate of 7.5% of the amount demanded could not be dispensed with - the appellant shall deposit pre-deposit amount in terms of order dated 23rd February, 2015 within a period of 10 weeks from today - appeal allowed in part.

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• 2017 (9) TMI 949
  Maintainability of appeal - alternative remedy of appeal - classification of goods - question of fact - Held that: - whether the projectors imported under the bill of entry dated 24.09.2007, about which the adjudication reached finality before the CESTAT, are exactly the same as the projectors imported during the period from 2011-2016, which form the subject matter of the present dispute, is a question of fact - This question of fact cannot be decided solely or principally on the basis of the decision of the CESTAT, dated 01.09.2010. In other words, the impugned order cannot be attacked solely on the ground that it did not simply follow the decision of the CESTAT dated 01.09.2010. Once this is clear, it is not possible for us to allow the petitioner to bypass the alternative remedy of appeal. The impugned order can be attacked on findings of fact by the petitioner only before the regular appellate authority and that this is not a case warranting the bypassing of the alternative remedy of appeal, on the ground that the issue is already clinched in favour of the assessee. Therefore, the writ petition is liable to be dismissed - petition dismissed being not maintainable.

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• 2017 (9) TMI 947
  Interest on delayed payment - whether the petitioner is entitled to the interest at least from the date when the appeal was dismissed? - Held that: - the clock stopped ticking at the time when the stay was granted by the Division Bench but ultimately the appeal was dismissed by the Division Bench on 30.09.2013 upholding the order of the learned Single Judge and the respondents to the reasons best known to them did not assail the validity of the order of the Division Bench any further. From that period onwards, the legitimate expectation of the petitioner started for getting refund but the respondents did not refund the money till 20.03.2014. For six months continuously, the amount which belongs to the petitioner was used by the respondents. Had this amount been returned immediately after dismissal of the appeal and the petitioner had invested the said amount then the petition would definitely got some kind of return which may be assessed in terms of interest. The petitioner is entitled to interest @ 12% to be paid on the amount refunded to the petitioner, to be calculated from 30.09.2013 to 20.03.2014 on Rs. 3.95 crores and from 30.09.2013 to 09.06.2014 to be calculated on Rs. 5 lakhs - decided in favor of petitioner.

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• 2017 (9) TMI 943
  Classification of imported goods - nine products - interpretation of facts regarding nature and usage of the products - The original authority classified these products either under Chapter 21 or under Chapter 33 depending upon the nature and usage of these products. Chapter 21 deals with miscellaneous edible preparations. Chapter 33 deals with essential oils and resinoids; perfumery, cosmetics or toilet preparations - The appellant-assessee claimed classification under Chapter 22, 29 and 30 of the tariff. These deal with beverages, spirits and vinegar (chapter 22), organic chemicals (chapter 29), pharmaceutical products (chapter 30). Held that: - We have perused the product literature and samples of the impugned goods. None of these products merit classification as medicines or medicaments. These are not having any therapeutic or prophylactic value. K-Link Puyikang/Puyikang Takara is basically for ladies hygiene. There is no curative or therapeutic value for these products. At the best, some of these products have effect of removing toxins, overall enhancing the well-being of the person consuming or using them. The appellant-assessee themselves clearly printed in the literature as well as on the product package that these are not drugs and not intended to diagnose, treat, cure or prevent any disease. The product as packed and marketed should be considered for classification. When the appellant-assessee themselves claimed that these are not for curing or treating any disease, the question of considering them as medicaments does not arise. In the present case, we are not dealing with any ingredients or products which are claimed to be in the Ayurvedic text or in recognized Pharmacopoeia. In fact, the Hon ble Supreme Court examined the scope of Chapter 30 and the meaning of the term medicament . As noted earlier in this order and discussed elaborately in the impugned order, none of the products which are examined in the present dispute have any qualities which can be considered as curative in nature. Most of the products are aimed at enhanced well-being or hygiene and improved body conditions. These type of generic group items are rightly to be considered under Chapter 21 or 33 depending on the nature and usage. Extended period of limitation - Held that: - there is no evidence to support the claim of the Revenue that the appellant-assessee deliberately mis-declared the description of the imported goods in order to evade payment of duty. It was recorded that the product literature was made available to the department - The claim of the appellant assessee for a particular classification by itself will not make the case for mis-declaration, when all the required details including the product literature and the imported product itself being available at the time of assessment. There can be no question of demand for extended period invoking fraudulent mis-statement etc. in such situation - extended period cannot be invoked. Appeal dismissed - decided against appellant.

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• 2017 (9) TMI 931
  Forfeiture of Bank Guarantee at the time of re-import - failure to seek extension of time - whether the appellant has complied with the condition of N/N. 158/95 or not? - Held that: - in the notification, nowhere it is mentioned that the appellant is required to seek extension of time within six months from the date of re-importation. In fact, the fact is not in dispute that re-imported goods are required to be reexported within three years of re-import as per condition (i) of the said notification. When the main condition of notification has not been violated by the appellant, therefore the benefit of notification cannot be denied merely on the ground that appellant did not seek extension of time within 6 months of re-import - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 930
  Jurisdiction - power of Assistant Commissioner of Customs (Prev.) to issue SCN - Held that: - the notice issued by the Assistant Commissioner of Customs (Prev.) who was not a competent authority as per the ratio laid down in the case of Mangali Impex Ltd. Vs. UOI [2016 (5) TMI 225 - DELHI HIGH COURT] - In this connection, we note that similar issues have been dealt with in various cases by the Tribunal recently. It is held that the matters have to be remanded back to the original authority for a decision - appeal allowed by way of remand.

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• 2017 (9) TMI 926
  Valuation - leftover ATF available in the fuel tank of aircraft landing in India from an international trip - includibility - notional freight charges - Rule 10(2) of Customs Valuation Rules - Held that: - the aircraft did not transport the fuel as a cargo or goods for the purpose of freight. Such interpretation will be a result of hyper-technical approach to the facts of the case. Admittedly, the remnant fuel is construed to be an imported item for the purpose of customs duty. In the importation of such remnant fuel, we could not discern any separate freight element, which can be added in the assessable value. The fuel in the tank is part of aircraft in operation. Fuel cost is calculated, and apparently, forms part of commercial consideration while fixing ticket charges for transporting aircraft. No freight element is attributable to fuel in the tank, the usage of which varies on different parameters. Rule 10(2) was applied by the lower authority on the ground that the freight of ATF is not ascertainable - there is no freight element involved and hence, there is no application for Rule 10 (2). There is no freight involved with reference to left over fuel in the tank of an operating aircraft. Hence, there is no question such freight being “not ascertainable” and hence addition of 20% notional freight. Penalty u/s 112 - Held that: - The procedure followed by the appellant and regularly intimated to the Department has not been varied by the Revenue. No loss of revenue has been alleged except for non-addition of notional fright in the value of ATF. As such notional additional is not legally sustainable. In view of these observations, there is no sustainable reason for imposing penalty on the appellant under Section 112. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 925
  Interpretation of statute - importer - whether or not the appellant is considered to be an “importer” of the impugning goods? - Held that: - the term “importer” is clearly defined in the Act. It includes any owner or any person holding himself out to be importer. These are to be established by factual enquiry - When the appellant denies that he did not import goods and did not hold himself to be the importer of such goods, then it is for the Revenue to categorically establish that the appellant was indeed the owner of the goods. Except for the Bill of Lading which itself is being disputed as a mistaken transaction by the shipper, there is no other evidence on record to hold the appellant as the importer or person behind the importation of such goods. Admittedly, there is no evidence that the appellant received invoice, packing list or remitted any money towards impugning goods. In fact, there are correspondence to show that the appellants protested with the supplier on the receipt of consignment in his name. Without commenting on the genuineness of these correspondents, it can still be concluded that the appellants do not fall within the statutory scope of “importer” under Section 2(26). Misdeclaration of imported goods - penalty - Held that: - Section 46 deals with entry of goods on importation. The importer of any goods shall make entry thereof by presenting to the proper officer, a bill of entry for home consumption in the prescribed form. A bill of entry shall include all the goods mentioned in the Bill of Lading given by the carrier to the consignor. Section 46(4) stipulates that the importer while presenting the bill of entry shall make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall, in support of his declaration produce to the proper officer the invoice, if any, relating to the imported goods - in the present case, there has been no bill of entry filed by any person. The appellants claim that they have not filed any bill of entry - the Bill of Lading is not an assessing document for custom authorities. It cannot substitute a bill of entry - in this regard, the original authority had fallen in error in appreciating the legal provisions. The appellant did not file bill of entry or did not commit any act or omission which will render the goods liable for confiscation. They were contesting their connection/ownership of the impugned goods. The only evidence available is Bill of Lading issued in the name of the appellant. As already noted, the appellant did not make any attempt to clear the goods or abet any other person in clearing the goods - the evidences are not sufficient to bring in penal consequences under Section 112 of the appellant. The impugned order are set aside in so far as it relates to duty liability or penalty as confirmed against the appellant - appeal allowed in part.

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• 2017 (9) TMI 914
  Rectification of mistake - Held that: - The argument that proposition of law laid down in the paragraph 5 of Order of Hon’ble Madras High Court in case of Indo Overseas [2006 (12) TMI 42 - HIGH COURT, MADRAS], it is seen that the said proposition of law has been considered in para 6 of the order dated 7-7-2017 and only after considering the observations of Honble High Court findings in para 7 and 8 has been arrived at - there are no error apparent - ROM application dismissed.

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• Insolvency & Bankruptcy

• 2017 (9) TMI 927
  Corporate Insolvency Resolution Process - Insolvency and Bankruptcy Code, 2016 - Initiation of corporate insolvency resolution process by financial creditor - completion of application - Held that:- A defective application can be corrected by removing the defect. Similarly, if an application is incomplete, it can be completed, but if any misleading statement is made in an application no time can be granted to recall the misleading statement and such application is fit to be rejected. In the present case, it is not the case of the Appellants that there is a mismatch between the amount shown in the notice under Rule 4(3) and the amount of default shown by the 'Financial Creditor' in its original application under Section 7. On the other hand, the 'Corporate Debtor' has explained that the amount of interest as was calculated upto 31 t March, 2012, if further calculated for the period from 1St April, 2012 to 14th May, 2017, then the total debt comes to Rs. 1,09,32,72,312.86p. The default amount as on 31st March, 2012 remains constant. Thus we find that neither any misleading statement was made by the 'Financial Creditor' nor any misleading statement of default was made. The case of the Respondent-'Financial Creditor', being different from the case of 'ICICI Bank Limited' (the 'Financial Creditor' of M/s. Starlog Enterprises Limited), the plea taken by the Appellants cannot be accepted. Another ground taken by the Appellants is that the person, who filed the application under Section 7 was not authorised by the Board of Directors of the Bank of India ('Financial Creditor'). The Respondent has brought to our notice that the person who has filed the petition under Section 7, is an officer of Bank of India (Financial Creditor) and was authorised by the Board of Directors to do so. Therefore, the impugned judgement cannot be interfered with on such ground. In view of the discussions as made above and in absence of merit, we are not inclined to interfere with the impugned judgment and, accordingly, dismiss the appeal.

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• PMLA

• 2017 (9) TMI 952
  Prevention of Money Laundering Act, 2002 - grant of bail - Held that:- In the present case, sufficient material has been placed on record to show, of course, prima facie, that petitioner is not a house wife. She is a highly qualified lady having completed Masters in Finance in the year 2002 from international university. She was actively involved in the affairs of the various companies by virtue of her holding responsible positions, inasmuch as, she was holding power of attorney in her favour from M/s Atlanta Natural Resources PTE. Ltd., Cronimet Mining GmbH, Matrix Holdings Limited etc. In the order dated 23rd August, 2017, learned Special Judge has recorded, on the basis of medical reports regarding health condition of the petitioner, that physiotherapy was being provided to her. It has been further noted that upon enquires made from the petitioner she submitted that she was getting proper medications and physiotherapy. Order dated 4th September, 2017 also indicates that jail authorities have been directed to make necessary arrangements for physiotherapy of the petitioner. There is nothing on record to establish that petitioner is suffering from such serious ailments which necessitates her treatment in multi specialty hospital from specialist doctor. Petitioner can be and is being provided medical treatment in jail itself. Petitioner only requires physiotherapy which can easily be provided either in jail or in any other hospital affiliated to the jail or in the vicinity of the jail. The offence alleged against the petitioner falls under the category of economic offences which stand on a graver footing. These crimes are professionally committed by white-collared people which inflict severe injuries on both health and wealth of the nation. Such offences need to be dealt with a heavy hand and releasing such accused on bail will affect the community at large and also jeopardize the economy of the country. The plea of parity is also not tenable in this case since the court did not consider, refer to and discuss the rigours of Section 45(1) of the PMLA. Petitioner has also failed to bring out any special circumstances for her release on bail being a woman or sick, keeping in mind the nature and gravity of offence, bail application is dismissed.

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• Service Tax

• 2017 (9) TMI 950
  Entitlement of the respondent to the refund - Held that: - It is crystal clear that the observation made in paragraph 5.1 is only prima facie observation made by the Customs, Excise and Service Tax Appellate Tribunal. The issue whether the respondent is entitled to refund in accordance with law is not at all concluded by the prima facie observation and issue of entitlement of the respondent to the refund has been expressly kept open to be decided by the Adjudicating Authority - we do not agree that the issue of entitlement of the respondent to claim refund does not remain open - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 944
  Business Auxiliary service - Steamer Agent services - non-payment of service tax on considerations which should form part of taxable value under the category of "Steamer Agent Service" and "Business Auxiliary Service" - period from 1.10.2001 to 31.3.2006 - Held that: - the Tribunal examined similar issue in DSP Merrill Lynch Ltd. Vs CST Mumbai [2016 (2) TMI 221 - CESTAT MUMBAI] - The Tribunal held that amount of write backs are those which are yet to be claimed by the assessee. These amounts are payable to the client when the claims are lodged. Accordingly, they cannot be considered as consideration received towards services rendered. Regarding exchange rate, appellants are uniformly following the rate as per the date of accounting of receipt of brokerage / commission. The difference in exchange rate which is because of date of presentation of accounts for realization is not attributable to extra consideration. The same will work whether negative or positive side which is not considered for tax liability by the appellant. They calculate tax liability as per the date of brokerage, accounting, and there is no reason to infer infirmity in such action. Brokerage Rate - Held that: - The services rendered to shipping line are rightly taxable under "Steamer Agents Service". Appellant admits this legal position. However, their claim is in respect of services rendered to other steamer agents. The same is not liable to be taxed as 'Steamer Agent Service'. At best, it could be only "Business Auxiliary Service" - The split up figures can be verified based on the documents submitted by the appellant and duty liability can be worked out on that basis. Documentation charges - Held that: - when the activities constitute services provided directly to a customer and do not constitute service provided on behalf of principal, the same cannot be taxed under BAS - In the present case, the residual clause has no application since it is not established that the said service is incidental to any of the services listed from clauses (i) to (vi) under BAS - tax liability set aside. Time limitation - Held that: - jurisdictional officer has endorsed the ST-3 returns which can happen only on due satisfaction of verification of all documents and not on mere perusal of the returns - demand for extended period not sustained, and limited to normal period only - penalty also set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 941
  Taxability - commission received for distribution of mutual fund units of various mutual fund companies during the period w.e.f. 09/07/2004 to 31/03/2005 - case of appellant is that the main contractor has duly discharged service tax liability on the said commission - Held that: - similar issue decided by the Larger Bench in the case of Vijay Sharma & Co. Versus. Commissioner of Central Excise, Chandigarh [2010 (4) TMI 570 - CESTAT, NEW DELHI], where it was held that sub-brokers are not liable to pay any service tax as the same has already been paid by the main stock broker. Extended period of Limitation - Held that: - In this case for the period 9th April 2004 to 31st March, 2005, the SCN has been issued on 24/01/2009 - the demand is time barred on limitation. Appeal allowed on merits as well as limitation - decided in favor of appellant.

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• 2017 (9) TMI 940
  Refund of unutilized CENVAT credit - rejection on the ground that payments have been received in Indian rupee which does not satisfy the requirement of Rule 3(2)(b) of Export of Service Rules, 2005 - Held that: - this issue has been considered by various Benches of the Tribunal and it has been consistently held that merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange as provided in Export of Service Rules, 2005. Since the Indian rupee is received from the recipient of services through their foreign bank, Silicon Valley Bank of USA, the receipt of Indian rupee shall be treated as convertible foreign exchange. When a person receives in India payment in rupees from the account of a bank situated in any country outside India maintained with an authorised dealer, the payment in rupees shall be deemed to have repatriated the realized foreign exchange to India - In the present case, the payment in Indian rupees was received from foreign country through Deutsche Bank. Therefore, the said Indian rupee is nothing but foreign exchange repatriated from foreign country to India. Therefore, such payment in rupees is equal to the foreign exchange. The payment received in Indian rupee for which FIRC issued by the Standard Chartered Bank and the payment is routed through foreign bank, shall fulfill the condition of payment (convertible foreign exchange) and therefore, the denial of refund on this ground is not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 939
  Business Auxiliary Service - supervision charges collected from sugar factory - Held that: - It is seen that no specific activity has been identified by the Revenue for which consideration of supervision charges has been received. In absence of exact nature of activity done for which supervision charges has been collected, it is not possible to classify the said services under any of the category of taxable services - no grounds have been made by the Revenue to classify the said service under head of Business Auxiliary Service. Just because charges are paid to a agency for supervision, demand under Business Auxiliary Service cannot be made. It is incumbent upon Revenue to show that said services are classifiable under Business Auxiliary Service - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 938
  Business Auxiliary Service - Commission received for selling SIM Card, Pre-paid and Recharge Vouchers of M/s. Bharti Cellular Ltd. - Held that: - the value at which the SIM Card is sold, the telecom service provider i.e. M/s. Bharti Cellular Ltd. are liable to pay service tax on the entire value of the SIM Card, Pre-paid and Recharge Vouchers. Since the entire value which includes the commission suffered the service tax in the hands of the principal telecom service provider M/s. Bharti Cellular Ltd., the demand of service tax from the appellant who is only distributor of SIM Card/Pre-paid and Recharge Vouchers will amount to double taxation - similar issue decided in the case of RB AGENCIES Versus COMMISSIONER OF CENTRAL EXCISE, CALICUT [2007 (7) TMI 200 - CESTAT, BANGALORE], where it was held that the appellants do not render any service but simply sell the goods, Therefore, they would not be liable to pay Service Tax under the category of “Business Auxiliary Services” - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 937
  Erection, Commission and Installation Services - Construction of Green House - it is contended that greenhouse falls under the category of plant or equipment - Held that: - The greenhouse is a building on ground and is enclosed a structure. The said structure contains ventilation and window/doors. In view of the above, it is apparent that a greenhouse would fall under the category of building. Greenhouse is used for commercial production of crops, vegetables, fruits and other agriculture produce. As a result, use of greenhouse is industrial in nature. In these circumstances, it cannot be denied that the said greenhouse would fall under the definition of plant - appellants are engaged in the activity of installation of plant (greenhouse), and therefore the appellants are liable to pay services on the said activity. Extended period of limitation - Held that: - appellant were aware of the service tax liability - the document cannot be relied as it is unsigned is misplaced as the said document was recovered from the appellant's own premises - extended period of limitation is rightly invoked. Various other issues have not been examined in the impugned order - matter is remanded to the adjudicating authority to consider all aspects - appeal allowed by way of remand.

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• 2017 (9) TMI 936
  Classification of services - Management Consultancy services - service of transportation and distribution, warehouse operations, logistics - Held that: - under the service of Management Consultancy Service the service provider provides the service in connection with the management of any organization - In the present case the respondent has no connection with the management of the organization. They are providing service of warehousing, transportation, logistics etc. which are independent services provided by the respondent to various clients and not service of management of the organization their clients. It is absolutely clear that the services provided by the appellant do not fall under the category of management consultancy services. The services provided by the respondent do not fall under the category of Management Consultancy Services, accordingly the demand was rightly set aside - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 935
  Refund claim - rejection on the ground of time bar - whether the respondent is eligible for refund of Service Tax paid on the ‘business auxiliary service’ availed for export of goods? - Held that: - the issue stands settled by the ruling of Hon’ble Delhi High Court in the case of Sony India Ltd. vs. Union of India [2014 (4) TMI 870 - DELHI HIGH COURT], where it was held that limitation cannot start to run prior to the date when the right to claim refund crystallizes - the exporter has to pay the tax on the services availed by making payment to the service provider and thereafter only the exporter can claim refund - refund allowed - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 928
  Penalty - Site Formation and Clearance Service - Cargo Handling Service - Held that: - the matter was under consideration by the Ministry of Coal and Finance and upon confirmation of the position that Service Tax is liable to be paid under the taxable service, SECL has accepted its liability and paid the Service Tax on behalf of the appellant. Works contract - composite contract - construction of Ash Dyke - Held that: - the construction of the Ash Dyke in the premises of the service receiver was a composite contract, involving supply of goods as well as execution of the assigned task - In view of the fact that the essence of contract is construction of Ash Dyke, involving supply of goods on payment of appropriate VAT, splitting of the said contract to classify the service under site formation and clearance service in the adjudication order is not legally sustainable. Scope of work pursuant to the above work order should appropriately be classifiable under works contract service, leviable to service tax with effect from 01.06.2007 - In the present case, since the period involved is from 25.11.2005 to 03.06.2006, which is prior to the effective date of levy of service tax on works contract service, in our considered view, the Service Tax demand of Rs. 79,02,503/- cannot be confirmed against the appellant. The ld. Adjudicating Authority has already referred the matter to the Jurisdictional Service Tax Authorities for verification of the payment particulars - matter on remand.

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• 2017 (9) TMI 923
  Classification of service - composite services consisting of a combination of different services - services of loading, unloading, together with shifting/transportation of household articles to various customers - whether classifiable under Cargo Handling Service or GTA service? - penalty - Held that: - It is a matter of fact that the customers never approach the appellant only for loading, unloading, packing or unpacking of goods - Considering the sensitive nature of the goods being transported, the appellant also undertakes other activities of packing etc., if so desired by its customers, which are optional. Thus, the modus operandi adopted by the appellant transpires that the principal aim and objective is for transportation of goods and providing of other services are incidental and ancillary to the main purpose of transportation. The decision in the case of Drolia Electrosteels Pvt. Ltd. [2015 (12) TMI 161 - CESTAT NEW DELHI] is squarely applicable to the facts of the present case, wherein by relying on the CBEC Circular No.104/7/2008-S.T., dated 06.08.2008, the Tribunal has held that the service provided by M/s Hira Industries (appellant therein) merits classification under the GTA service and not under Cargo Handling Service. The services provided by the appellant will appropriately classifiable under GTA service, instead of Cargo Handling Service - However, since the appellant has wrongly claimed abatement and subsequently paid the service tax amount of Rs. 14,10,083/-, the confirmation and appropriation of such amount in the impugned order is proper and justified. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 917
  Sub-contract - case of appellant is that the appellants being sub-contractors, they are not liable to pay service tax as the main contractor has discharged the service tax - extended period of limitation - penalty - Held that: - the issue whether the appellants being a sub-contractor is liable to pay service tax when the main contractor has discharged the service tax is neat question of law, which needs to be considered. On perusal of the orders of both the lower authorities, we find that this vital legal issue has not been considered - the matter needs to be remanded - appeal allowed by way of remand.

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• 2017 (9) TMI 916
  Manpower recruitment agency - Principles of Natural Justice - Held that: - The adjudicating authority had no occasion to deal with the correct quantification for the reason that neither the appellant filed any reply nor attended any hearing before him. In such case at least the Commissioner (Appeals) should have either verified himself all the documents and the claim of the appellant regarding wrong quantification of the demand or should have called a report from the concerned division/range office. In the absence of carrying out such process there is a clear violation of principles of natural justice - appeal allowed by way of remand.

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• 2017 (9) TMI 915
  Commercial or Industrial construction Service - incorrect quantification - Held that: - the lower authorities have not correctly verified the actual quantification of the demand despite the same was submitted before them. Therefore, correct quantification has to be arrived at by the adjudicating authority - appeal allowed by way of remand.

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• 2017 (9) TMI 913
  Penalties u/s 77 and 78 of FA - non-payment of the service tax liability within time - works contract - Held that: - appellant could have entertained a bona fide belief that he having undertaken the work of construction of roads, drains, etc., no service tax liability arises. In my view, appellant has made out a case for invoking the provisions of Section 80 of Finance Act, 1994 - penalties set aside - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (9) TMI 945
  Duty liability - appellants were regularly procuring various items from domestic as well as the foreign source and bring the same to the PDC for further process and distribution on sale - Revenue entertained a view that the appellants are not discharging applicable central excise duty on various items which are subjected to different process in the PDC - Held that: - the appellants are engaged in repacking and relabeling of indigenous items with FORD MRP labels and in respect of imported items only relabeling of FORD MRP labeling are done at the PDC of the appellant - the Chapter Notes as they existed during the relevant period carried both the conditions of relabeling or bulk to retail pack. The appellant would not be put to duty liability based on these Chapter Notes r/w section 2(f)(ii). In respect of these items, upto the period 1.3.2003. We note that lubricating oils, adhesive kits, coolants etc. will be covered under Schedule III which figures the respective entries finding place in the said Schedule which is applicable with effect from 1.3.2003 - the appellant is liable to duty of their activities in respect of three products from that date. Classification of goods - emblem radiator grill, cap assembly oil filter, audio players with or without speakers, bulbs, switches, fuses and relays - Revenue classified these items under Chapter 39 and 85 - deemed manufacture - Held that: - audio players with or without speakers, radio assemblies are sound reproducing equipments which are specifically to be under the classification of Tariff Entry 8527 as per the clarificatory note of HSN applicable at the relevant time. As such, following the clarificatory note of HSN, we find the product is rightly classifiable under Chapter 85 and is subjected to levy of duty in terms of the above Schedule r/w section 2(f)(iii) for the period after 1.3.2003 - Considering that these are items are designed for manufacture for use in automobile industry and same was recorded by the original authority also in more than one place of the impugned order, we find no justification to call these items as generic articles of plastic when they are admittedly principally and solely usable in the automobiles. As such, the duty liability in terms of the above Schedule r/w section 2(f)(iii) will not raise prior to 1.6.2006. Regarding duty liability of the appellant on bulbs, switches, fuses and relays, we note that the original authority classified the same under Chapter 8536/8539. These entries are for electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits, for a voltage not exceeding 1000 volts and electric filament or discharge lamps including sealed beam lamp units and ultra-violet or infrared lamps, arc lamps - In the present case, admittedly, the products in dispute are specifically designed and usable only with automobile except when they are excluded to be classified under Chapter 87 as components, parts and accessories, they have to be classified under Chapter 87. Heading 812 is not discussed for a decision in the impugned order. Extended period of limitation - penalty - Held that: - there can be no positive sustainable allegation of willful mis-statement, fraud, collusion etc. to invoke the extended period or to impose penalty - demand upheld for normal period - penalty set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 942
  CENVAT credit - input service distributor - Held that: - only two limitations are put for the distribution of credit by an input service distributor. Firstly, it cannot exceed the amount of service tax paid and secondly, the credit of service tax attributable to service used shall not be distributed in a unit exclusively engaged in the manufacture of exempted goods or providing of exempted services. There is nothing wrong in the impugned order allowing CENVAT credit to the assessee - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 934
  Area Based Exemption - N/N. 50/2003-CE dated 10.06.2003 - The main appellant obtained Central Excise registration in respect of Unit-I and filed a declaration on 21.04.2008 for availing area based exemption under Notification No.50/2003-CE dated 10.06.2003 in respect of Unit-II - Revenue entertained a view that the claim of the main appellant to the effect that Unit-I and Unit-II are to be dealt with separately for excise duty purposes and the exemption claimed for Unit-II on such basis, is not legally tenable - Held that: - there were certain factual errors recorded by the original authority while examining the dispute. He records that the excise registration and the declaration filed under Notification No. 50/03, covered entire premises. We note that in the intimation dated 21.04.2008, the appellant categorically displayed a site plan clearly demarcating Unit-I & Unit-II with a specific remark. Similarly, the original authority records that the term “unit” used in the said notification refers to the said “factory”. The original authority records that it does not matter for Central Excise purposes as to by which name – whether by name of plant, unit or the like, each set is described. Since each unit cannot be described as a factory, he proceeded to hold that the whole premises should be considered as single entity and exemption was accordingly denied. The CBEC vide their letter dated 21.03.2006 addressed to Secretary (Industrial Development), Government of Uttaranchal clarified that in case of a manufacturer, producing motor vehicles, if a new assembly line/ production line is installed after 31.03.2007, then the benefit of said notification would not be available to motor vehicles manufactured on such assembly/production line. In various decisions, the Tribunal held that terms “unit” and “factory” cannot be accorded the same meaning for the purpose of Notification No.50/03. A notification grants exemption to new industrial units or existing industrial units undertaking substantial expansion. The exemption is not with reference to a factory. This is clear from the wordings of the notification. We also agree that the definition of “factory” under Section 2(e) of the Central Excise Act is much wider and cannot be made applicable to a unit/industrial unit involved in manufacture of specified goods. All such units are necessary part of a factory, if located in the contagious area. Each division of a factory manufacturing different identifiable items or undertaking different identifiable processes will have to be considered as a unit of the factory. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 933
  Refund claim - rejection on the ground of unjust enrichment - Held that: - agreement between the appellant and the MP government is for providing mobile medical van and as per the agreement price was cum service tax price. As no service tax is payable by the appellant, therefore, question of recovery of service tax from MP Government does not arise - the bar of unjust enrichment is not applicable to the facts of this case - appellant is entitled for refund claim - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 932
  Shortage of raw material - copper ingots - clandestine clearance - Held that: - As duty is to be demanded on the goods manufactured by the assessee and admittedly, it is fact on record that the appellant is not manufacturer of copper ingots therefore, no duty can be demanded on copper ingots - the duty cannot be demanded on copper ingots - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 929
  Refund claim - denial on the ground of unjust enrichment - Held that: - The invoice clearly shows that appellant has paid duty at the rate of 12%. Although the appellant is selling goods on MRP basis but duty payable has been shown by the appellant at the rate of 12% - duty has been paid by the appellant voluntarily on the understanding that they are required to pay duty at the rate of 12%. Further, appellant has failed to produce any evidence on record that buyers have not availed Cenvat Credit on duty shown in the invoice. In that circumstances appellant has failed to pass the bar of unjust enrichment - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 924
  Principles of Natural Justice - case of appellant is that the copy of the report submitted by the Range Superintendent to the learned Commissioner (Appeals) was not served on them - Held that: - the impugned Order-in-Appeal was passed in violation of principals of natural justice. Therefore, I remand the matter back to the learned Commissioner (Appeals) with directions that learned Commissioner (Appeals) shall make copy of report of range superintendent submitted to the learned Commissioner (Appeals), informing the details of the register under which copy of said acknowledgement was forwarded by range superintendent to original authority available to the appellant - matter remanded for fresh adjudication - appeal allowed by way of remand.

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• 2017 (9) TMI 922
  CENVAT credit - input services - Construction of scrap yard, barbed wire fencing, canteen hall and dining hall - security services at guest house - Held that: - on all the services in question the Cenvat credit was allowed in the catena of judgements. CENVAT credit - construction of road and drainage system inside factory - credit disallowed on the ground that these services are exempted - Held that: - unlike in Central Excise Act, under Section 5A there is no restriction for payment of service tax on exempted service, therefore if the service provider choose to pay service tax, the same shall be available as Cenvat credit to the recipient of the service - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 921
  Classification of goods - contract for complete installation of the lifts on lump sum basis - complete lift or parts/components - The goods purchased by the appellant are either directly taken to the site for installation or brought to the factory and then taken to the site for installation. After installation the lifts come in its existence as immovable property - whether the set of parts/components manufactured and cleared by them from the factory for the purpose of installation in one or more consignments would be classifiable under Heading 84.28 as lift/lifting machinery or as parts under heading 84.31 of the Central Excise Tariff Act, 1985? - rules of interpretation - Board's Circular No.16/89, dated 19-4-1989. Held that: - It is seen that the matter has been remanded for consideration of defense of the appellants that the goods cleared by them have been tested only with reference to the product 'LIFT' but not with reference to the description 'LIFTING MACHINERY' appearing in the tariff heading 84.28 - It is apparent that the heading 84.28 covers lifting machinery, handling machinery, loading or unloading machinery. The heading 84.28 gives specific examples of such machinery as lifts, escalators, conveyors, teleferics. The argument of the appellants is that the product manufactured by them, together can be considered as 'Lifting Machinery'. The idea being that the lifting machinery is a broader term and would include in its scope not only lifts but all other machineries capable of lifting. Thus if the products manufactured by them together have essential character of a lifting machinery, it would be classifiable under heading 84.28 even if it is held that it does not have essential character of 'Lift'. The fact of the case is the appellants are getting orders for lifts. The products are custom made as per the needs of each of the buyer. The appellants are manufacturing a few item and they wish to call those items collectively as 'Lifting machinery'. They have, however, not come forward with any evidence that the said items manufactured by them together constitute a machine. The role played by each such item manufactured by them in the whole scheme of things needs to be examined. The appellants have not shown as to how these individual items manufactured by them are capable of working as a machine. If these items manufactured by them are indeed capable of working together as a unit to be called a 'machine' needs to be ascertained. If these items are indeed capable of working together as a unit then the function that they can perform needs to be seen. What distinguishes the term 'machinery' from the term 'Lifting Machinery' is the ability of the items manufacture by them to interact with each other in such a manner that it can perform the function of lifting. Does that function amounts to lifting to enable the same to be classified as 'Lifting Machinery' needs to be established. While a claim has been made by the appellants that the items manufactured by them can be classified as 'lifting machinery' they have not come forward with the nature of machine that will come into existence from the items manufactured by them and how it will be capable of performing the function of lifting. These are factual aspects aspects that need ascertainment - matter is remanded to the original adjudicating authority to examine the issues and pass fresh orders. Appeal allowed by way of remand.

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• 2017 (9) TMI 920
  CENVAT credit - welding electrodes - Held that: - following the decision in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], the CENVAT credit on welding electrodes allowed. CENVAT credit - MS Angles, MS Channels and Steel Plates etc - Held that: - allowability for fabrication of supporting structures and foundation etc. have been held to be allowable by Hon’ble Madras High Court in the case of India Cement Ltd. [2014 (7) TMI 881 - MADRAS HIGH COURT] - CENVAT credit on MS angles/ channel allowed. CENVAT credit - Joist and TOR Steel - Held that: - It is stated that Joist have been used in staging of Juice Sulphiter, Juice weighing scale and sugar beater. Joist have been uses as supporting structure of equipment in the factory of production but, not used in civil work admittedly. I hold that joist etc. also qualifies for Cenvat credit - Cenvat credit on MS rods/Jointing sheet, MS Channels, etc. used for erection of capital goods that is fabrication of structural to support various machines like crusher, kiln, hoppers, etc. is available, as without such structural support, machinery could not be erected and would not function - The other item TMT Flats bars is also held qualified for Cenvat credit. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 919
  CENVAT credit - input services - whether the respondents are eligible for Cenvat Credit on Catering Services and Office/Garden maintenance services utilized in their factory before 01.04.2011? - Held that: - the Hon’ble Bombay High Court in the case of CCE Nagpur Vs. Ultratech Cements Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] had held that Service Tax paid by the employer on the Outdoor Catering Services is eligible for Cenvat Credit. Garden/Office maintenance - Held that: - the Tribunal in the case of CCE Vs. Lupin Ltd. [2012 (4) TMI 499 - CESTAT, MUMBAI] has held that the input services for maintaining Garden and for Office maintenance are eligible for input services credit. Credit allowed - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 918
  CENVAT credit - input - whether the appellant is entitle for availment of cenvat credit in respect of input used for job work goods, which is returned to the principal without payment of duty under N/N. 214/86-CE dated 25-3-1986? - Held that: - issue is no longer res-integra in view of judgments in case of Larger bench decision in case of Sterlite Industries(I) Ltd [2004 (12) TMI 108 - CESTAT, MUMBAI], where it was held that Modvat credit of duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilisation in the manufacture of final product, which are cleared on payment of duty by the principal manufacturer, would not be hit by provision of Rule 57C - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 912
  Refund of accumulated CENVAT credit - benefit of N/N. 30/04-CE dated 9-7-2004 - rejection on the ground that only provision under refund of accumulated Cenvat credit is under Rule 5, which is specifically against export of goods and accumulated Cenvat credit due to exports - Held that: - if accumulation of the credit is due to export of the goods appellant is entitle for the refund, as they have opted exemption N/N. 30/2004, the appellant is unable to use of accumulated Cenvat credit, therefore on opted of exemption N/N. 30/04-CE the accumulated Cenvat credit on account of exports is refundable - Since lower authority has not examined whether accumulated cenvat credit is on account of export of the goods, matter needs to be re-considered - appeal allowed by way of remand.

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• 2017 (9) TMI 911
  CENVAT credit - duty paying invoices - fake invoices - receipt of invoices only without receipt of goods - Penalty u/r 26 - Held that: - it is case of fraudulent Cenvat credit availed on the invoices issued by M/s. Ispat Industries Ltd and M/s. JSW Steel Ltd. - On the identical facts and under same investigation in many other cases, demands were confirmed. Reliance placed in the case of Amar Ispat Pvt. Ltd., Sandeep Garg, Mohammad A. Master, Mohsin Hajibhai Memon, Harikrishna B. Soneji, Ram Awatar Agarwal & Diamond Roadways Versus Commissioner of Central Excise, Thane-I [2015 (11) TMI 373 - CESTAT MUMBAI], where it was held that Since the invoices of such HR trimmings were of no use to them, they were trading the invoices through brokers based in Mumbai who in turn were locating the furnace units who could fraudulently avail the credit based on such invoices. The cash amount of HR trimmings being sent through angadia or other services from Viramgam and nearby area and were being converted into Bank Draft etc. through banking channels either by such. brokers or by manufacturers of ingots or was used in cash to purchase bazaari scrap/scavenger scrap, the demand upheld. The supplier M/s. Ispat Industries Ltd and M/s. JSW Steel Ltd have cleared the HR Trimming on payment of duty by issuing invoices in favor of person whose name were given by the auctioneer. The goods were sold at factory gate therefore act of fraudulent availment of credit which has taken place after removal of goods from factory, the appellant M/s. Ispat Industries Ltd and M/s. JSW Steel Ltd had no control therefore penalties imposed under Rule 26 on these appellant is not proper. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 910
  Manufacture - conversion of aluminium/copper wire into transformer coil - Held that: - the said issue in the assessee’s own case Sub Divisional Officer Punjab State Electricity Board Versus CCE, Jalandhar [2013 (5) TMI 345 - CESTAT NEW DELHI], where this Tribunal has held that the activity undertaken by the assessee does not amount to manufacture, therefore, no duty is payable by the assessee - the process/activity undertaken by the assessee does not amount to manufacture - demand not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 909
  Shortage of Finished Goods - clandestine removal or not - Held that: - there is no case of the department that short found quantity was removed by the appellant clandestinely or otherwise - The adjudicating authority has not properly considered the reasons stated by the appellant regarding the shortage alleged by the department. Extended period of limitation - Held that: - The shortages were reflected in annual reports and there was no suppression and hence extended period of limitation was not applicable. The matter needs re-consideration by the adjudicating authority, after taking into account all the explanation, based on the documents - appeal allowed by way of remand.

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• 2017 (9) TMI 908
  Refund of CENVAT credit reversed - input services - appellant reversed the Cenvat credit but no show cause notice was issued for reversal of Cenvat credit and on relising that appellant has correctly taken the Cenvat credit, the appellant filed refund claim in time - Held that: - To reject the refund claim filed by the appellant, no show cause notice was issued. For adjudication of a refund claim, if some refund claim is not maintainable, the Adjudicating Authority is required to issue show cause notice giving reasons for rejection of the refund claim. In this case, the said exercise has not been done. Therefore, the refund claim cannot be rejected on these grounds itself. Whether the appellant is entitled to CENVAT credit? - Held that: - mere name of the supplier/ manufacturer mentioned wrongly by the registered dealer against which invoices were issued, Cenvat credit cannot be denied, where the appellant has received the goods and paid duty thereon - appellant entitled to CENVAT credit. CENVAT credit - insurance claim - Held that: - The insurance company never reimbursed the duty or tax payable on those goods. It is a fact on record that no duty part has been reimbursed by the insurance company - the Cenvat credit on the goods lost in fire is not required to be reversed by the appellant. Refund allowed - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (9) TMI 948
  Maintainability of appeal - Interpretation of Statute - Section 19 (2) (ii) of TNVAT Act - Held that: - the State is in the process of preferring Appeals, by re-presenting the Appeal papers and the Appeals are yet to be numbered. The settled legal position being that, mere pendency of the Appeal(s), without interim order(s), will not amount to the grant of stay of the order(s) passed by the Lower Court or Lower Forum - In the instant cases, it appears that the Appeals filed by the State are yet to be numbered. Therefore, this Court is inclined to issue appropriate direction in these Writ Petitions, however, leaving it open to the respondent to pursue their Appeals.

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• 2017 (9) TMI 946
  Jurisdiction - time limitation - whether the first respondent, in exercise of his powers under Section 32 of the TNGST Act, while purporting to pass orders of assessment could do so, beyond the period of limitation stipulated under Section 16 of the TNGST Act, 1959? - Held that: - the notices issued to the petitioners contain seven pages, which are common to all the petitioners. In fact, these seven pages appear to be photo stat copies, which are commonly prepared and the name of the dealer has been filled up in hand at the appropriate place. Thus, the entire purpose behind issuing impugned notices is to re-open the concluded assessment - the pattern adopted by the first respondent is identical to that of the pattern adopted by the respective Assessing Officers for either earlier or subsequent assessment years. Hence, the first respondent had no new material to come to the conclusion that the assessments have to be re-opened, as it is prejudicial to the interest of the Revenue, and he forms such opinion on enquiry being made. If that is the factual position, then, obviously, the first respondent cannot exercise the powers, what could not have been done by the Assessing Officer, as the statement was recorded much after the assessments were completed, and the same are clearly barred by limitation, as it is beyond the period of five years. The power under Section 16(1) is wide enough and cannot be said to be limited to assessment of assessable turnover under that sub-section by the Assessing Authority only. It is to be invoked in all cases, where, a statutory functionary under the Act assumes jurisdiction to assess the escaped turnover. Therefore, it was held that, in passing an original order of assessment, the Board exceeded its powers under Section 34, and that the order was also passed beyond time. Therefore, the order was held to be unenforceable in law. The material sought to be relied upon was available with the Assessing Officer for the relevant assessment year. As noticed, the Assessing Officer himself, in the subsequent assessment orders has referred to the very same materials, which are contained in the earlier notice, and hence, the impugned notices are unsustainable - the impugned notices are wholly without jurisdiction - petition allowed - decided in favor of petitioner.

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